Guixols combines an absolute 'classic' value approach with real world observation and experience that some companies are able to sustain high above cost of capital returns on incremental investments for prolonged periods of time. This can be because of high-barriers-to-entry (for potential new competition), high switching costs for its (captive) customers or intellectual property protection.

In that case, on similar cash flow before discretionary investments, the company that can invest at returns considerably above cost of capital, is intrinsically more valuable than the company that invests just at cost of capital.  'Good´investments increase intrinsic value but short term can depress reported visible free cash flow, depending on the size of the investment opportunity. This contradition - less reported free cash flow, but more intrinsic value - often confuses markets and can create value opportunities for patient investors.